All work and no pay

Trying to get experience and a foot in the door of "glamorous" industries, young interns are working long hours for nothing - but is this little more than a modern-day form of slavery? Fenella Souter investigates.

In February, a young New Yorker called Diana Wang decided that working as an unpaid intern for five months last year for the US edition of Harper's Bazaar was not the opportunity of a lifetime. It wasn't, she felt, "educational" or for her benefit. In a The Devil Wears Prada, be-my-slave kind of way, it wasn't even much fun. In fact, what it most closely resembled was being an employee without the paypacket.

In an interview with Time magazine, Wang claimed she found herself working 55-hour weeks, sometimes until 10pm without a dinner break, and charged with responsibilities like shipping valuable hats between New York and London, shuttling heavy bags around Manhattan, and supervising eight fellow interns.

So she decided to sue. Wang and a group of disgruntled interns are now taking a class action against Harper's Bazaar's publisher, Hearst Corporation. Wang is arguing Hearst violated US labour laws by not paying her, even when she worked there full-time. By treating her and others as "interns", rather than regular employees, she's claiming Hearst denied not only wages but other entitlements, such as workers' compensation and access to anti-discrimination laws. Wang's class action is one of three lawsuits recently filed in the US on behalf of former interns.

The US has a long and widespread tradition of unpaid internships, especially in the "glamour" industries like publishing, television, film and advertising, but it looks as if the serfs are finally revolting.

If the Wang class action is making American companies nervous - and Hearst is looking at the prospect of backpay from 2009 if the plaintiffs win - perhaps it should also have Australian bosses and HR managers shifting uneasily in their ergonomic executive chairs.

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Anecdotal evidence - and there is no hard data - suggests a growing number of Australian companies, both the reputable and the fly-by-night, are offering young people situations that look remarkably like a job but are termed an "internship", "placement", "work experience" or a "trial" ... all unpaid. (We're not talking here of such arrangements tied to an accredited course requirement, now known as "work-integrated learning", although arguably those, too, are open to exploitation.) In April this year, the Fair Work Ombudsman, Nicholas Wilson, expressed concerns about these forms of unpaid work. He has commissioned two law professors to look into its legality. We'll come back to that.

The retail and hospitality industries are full of tales of unpaid "trial" periods. Two years ago, Helen Davis, now 24 and living in England, applied for a sales job with Paul Dane, a family-run Sydney shoe-and-accessory chain. Davis, then 22, already had sales experience, but that wasn't enough. After an interview at head office, she was told she would need to go to a store within the hour and work a four- or five-hour "trial" shift.

After the first hour, she says she was told to aim for a target: to sell around $400 worth of goods. Competing with three other employees eager for their commissions, she didn't reach it. "At the end it was like, 'Did you manage to sell anything? OK, thanks, bye.' I never heard anything more from them." She wasn't paid for her time.

A manager at the store confirms this is usual procedure, but when I call Paul Dane's HR manager, Alex Isaac (the bosses' daughter), and ask if unpaid trials are their policy, she says she'd like to "get her head around my question" and call me back. On her return call - having meanwhile rung the Fair Work Ombudsman to clarify the legal position - Isaac agrees that the firm has indeed "previously offered an opportunity to get an insight into the Paul Dane workplace by offering a voluntary trial". Paul Dane's understanding, based on information from the Australian Retailers Association, was that these trials were legitimate if "they were voluntary and not a requirement to getting the job". Following Good Weekend's call, however - "for which we're really appreciative", Isaac says; "you've done us a favour by pointing this out" - Paul Dane has now decided to drop the practice. She offers to pay Davis for her time.

The store is not alone. Zana Bytheway, who heads Victoria's JobWatch, an employment-rights legal centre, says her organisation averages a call a week about unpaid trials (it's generally outraged parents who do the calling, says Bytheway, because young people are too scared to complain, can't be bothered or don't know they should). Bytheway flicks through JobWatch's records as we talk.

"Look, here's one caller who said a hair salon in South Yarra had admitted they had 30 trial workers in one day," she says, echoing what another hairdresser tells me - that her boss regularly takes juniors on for four-hour free trials. "Another reports that a well-known takeaway chicken franchise had not paid her for two weeks of trial work." The list goes on: young people doing restaurant shifts for nothing; the applicant who was offered a job in a tanning salon that was yet to open and told she'd have to do 20 hours of unpaid work; a young fencing assembler who was required to work for three days unpaid; a young woman who worked as a receptionist for a small business for three months without any pay. Then there was the case of the paralegal who did three weeks of unpaid work, followed by eight weeks of unpaid training,

Anecdotal evidence suggests a growing number of Australian companies, both the reputable and the fly-by-night, are offering young people situations that look remarkably like a job.

before finally getting a casual job with the firm at $10 an hour.

What happened to proving yourself through interviews, resumes and paid trial periods? Workplace laws allow for a generous six- to 12-month probation period in which to dismiss an unsatisfactory employee. Where's the risk for the employer?

Tell people about the "trial" hairdresser or the unpaid kid up to his elbows in suds for a fortnight and they call it exploitation. "Internships", however, have a more exalted status. The very name, crisp with American vigour, endows them with a kind of professional sheen.

On the face of it, internships look like a good thing: a foot in the door, experience at the coalface, some flesh on a skinny CV, a chance to showcase talent, network, etc. So sought after are they in the so-called glamour industries, kids are trampling each other in a stampede to work for nothing.

Internships are not new in the "creative" industries, but a quick search of employment sites shows ads popping up for unpaid interns in more sober fields like accounting, online marketing and IT.

Commercial intern agencies, like Borch Leeman and Punk Jobs in Melbourne, are cashing in on the trend, targeting graduate jobseekers, mostly former overseas students. These companies charge fees running into the thousands to "place" graduates into unpaid work with Australian companies. Just to be clear, it's the intern who pays. In the case of Borch Leeman, for instance, a three-month placement costs the applicant at least $2850 (a $550 non-refundable application fee plus a $2300 placement and insurance fee) - money that has to be paid upfront before the placement goes ahead.

Melbourne's Consumer Action Law Centre says complaints have been made about some of these agencies - Punk Jobs, for example, was hauled before the Victorian Civil and Administrative Tribunal earlier this year - over unreasonable contracts and misleading claims, such as the promise of a job or an "IT" job that turns out to be internet marketing.

In some cases, the prospective employer is ignorant of the arrangement. Shane Brown is director of Weave, a non-profit youth service working out of South Sydney. About 18 months ago, an employment agency (Brown can't recall its name) called and said they had someone they wanted to place as a student.

"But in fact she wasn't a student," says Brown. "She had already completed a master's in accounting. It wasn't until she'd been here for two months that we found out she'd had to pay for the placement. We were shocked. We decided we would pay her for at least some of the work she'd done, although we couldn't pay her for the whole lot.

"Basically, we were confused about whether it was a student placement or not. We did have to sign some papers, but we had no idea she was having to pay for the experience. In retrospect, we probably hadn't done as much checking as we should have." Brown says they were more worried about it than she was. "She didn't understand it was exploitative at all, but I certainly felt it was. I was totally appalled."

Pimply youth form the face of the re- tail and hospitality industries, but it's not their juvenile charm that appeals as much as their willingness to work for a fraction of the adult wage, assuming they get paid at all. A 15- or 16-year-old earns 50 per cent of the minimum wage paid to a 20-year-old, that age being the adult turning point. It's why you don't see as many 20-year-olds giving you fries with that.

Rosa Gollan isn't pimply, but she's young and she has done her share of time in unflattering polyester uniforms. Now 22, she's a journalism student at the University of Technology, Sydney. She's smart, articulate, touchingly enthusiastic and almost terrifyingly ambitious, in a nice way. Her work history is typical of someone of her age and background: a series of jobs with lousy pay, coupled with some internships.

Gollan's first job, at 15, was at a Boost Juice outlet, where she earned $6-$7 an hour, about the current price of one of its Super Smoothies, with no weekend or holiday penalties. (In May 2010, the juice-bar chain's founders, Janine and Jeff Allis, reportedly sold a 70 per cent stake in the company for between $65 and $70 million to a US private equity firm.)

Her second, at 17, was at a chocolate shop, where she earned $8 an hour and had to sign an Australian Workplace Agreement (AWA). Some months after she left, she received a letter from the Workplace Authority advising her the AWA didn't pass the Fairness Test. "I hadn't applied to them to look into it or anything. They just did. And then I got this random call - very cool, very short - from my old supervisor and she said, 'We've been ordered to give you backpay so I've just transferred $900 into your account.'"

Her career hopes are vague but large, and she's willing to do almost anything to further them, including as many unpaid internships as it takes. In June this year, Gollan, a talented musician, scored one with the Sydney Symphony Orchestra, unconnected to course requirements. She is thrilled to have been chosen, after three rounds of interviews and set tasks. The SSO accepted all three "finalists" and Gollan is now finishing a 15-week unpaid internship. She puts in one full day a week, with proofreading, editing and internet tasks, plus two or more days at home, she estimates, researching and writing program notes for the orchestra's publications.

"I've got a big project on now and I'm going out of my way to do my best," Gollan says earnestly, "so every day I've been doing a few hours' research. It's partly because I don't have the knowledge in my head; I'm not a musicologist or music historian, and often the people they use to do their programs are. I want mine to be as good as theirs."

She couldn't be happier. "I don't feel, as you do in some places, that they've employed me because they want cheap labour. My mentor is going out of her way to make sure I really understand what's going on. She has taught me so much. I feel I'm learning more than I'm giving; that it's more of a benefit for me than it is for them."

Which, in fact, is precisely what internships should be - of benefit to the intern, rather than part of an employer's plan to meet budget.

If work is being produced, employers could be teaching interns and paying them, I suggest.

"I guess they could," Gollan allows. "But, with organisations like the SSO, if they had to pay me, they might not want to give me the experience of learning as much as I have. At the end of the day, I don't mind not being paid."

Like thousands of others, Gollan hopes her internship-studded CV will add lustre in the eyes of a future employer. Still, if every smart kid is doing them, one has to wonder how much of an "edge" they provide; it's rather like all athletes taking performance-enhancing drugs. Gollan says it will come down to how many and where.

In truth, the field is not level to begin with. Aside from the fact that many internships are won on the basis of who your mum or dad happens to know, financially they are a middle-class privilege. Andrew Stewart, a professor of law at the University of Adelaide, says the US experience shows the growth of unpaid internships and long unpaid trials is creating a barrier into many professions for people from less affluent backgrounds. "You have to ask, 'Who is it that can afford to do months and months of unpaid work and support themselves?'," says Stewart, "and the answer normally is people who have got independent wealth or who have well-to-do families."

Companies say they can't afford to pay interns, but Zana Bytheway says we've been lulled into accepting that. "We're all sort of tacitly approving this business of not paying young people, sometimes for long periods of time," she says. "We keep saying, 'Oh, that's the way it has to be', but actually it doesn't. The larger organisations especially are able to pay at least something."

As with the internship system in the US, a backlash may be brewing against the system. Australia's Fair Work Ombudsman, Nicholas Wilson, has already expressed concerns about the legitimacy of the kind of unpaid arrangements which go beyond voluntary work for, say, a charity or work experience tied to a school or tertiary course.

To that end, his office has commissioned a research project from Stewart and his colleague, Professor Rosemary Owens from the University of Adelaide. They expect to complete it later this year.

It's going to take at least two experts in workplace law to sort it out. In Australia, more so than in the US, observes Professor Stewart, the law in this area is "an ocean of uncertainty" with only a few small islands of clarity. At the heart of it: are these in fact employment contracts masquerading under another name?

By law, an employment contract doesn't have to be something written. It can be merely an understanding that a party has agreed to do work for something - including experience - in return. If there is an employment contract, then the Fair Work Act says the person has to be paid. He or she would also be entitled to holidays, sick pay, insurance against injury and superannuation. If there isn't, workplace safety laws still apply, and in some cases anti-discrimination laws - but that's about it.

It's reasonable, says Stewart, to ask someone to observe work or briefly demonstrate their skills. A typing test, perhaps, or making a macchiato. "There's no problem at all with, for example, a hairdresser who says, 'We want to look at you cutting someone's hair to see if you can do it'." It's a different matter to ask someone to do a shift or spend a week doing work with paying customers, work that would otherwise have been done by the owner or a paid employee.

"If you are doing work that directly benefits that business or organisation, and getting something in return - even if it's only gaining skills or experience - there's a very strong argument there could be an employment contract," Stewart continues. "That has certainly been the view of the Fair Work Ombudsman to date."

One of the difficulties is that our workplace laws don't deal clearly with this issue, and the courts have rarely had to rule on the status of someone doing work experience. But Stewart predicts we'll see some test cases over the next few years, and that will throw more light on what's lawful and what's not.

"If they didn't go in as an intern, they wouldn't go in at all," one magazine editor, who didn't wish to be named, tells Good Weekend. "On the fashion magazines, for example, you'll get hundreds of people applying for a paid position. It helps if you have a whole stack of internships on your resume."

Yet there are two contradictions here: first, hundreds of people are now applying for internships and second, internships themselves may be killing off the real jobs. With a glittering field of clever, willing interns prepared to work for nothing, where's the incentive for companies to pay? Good Weekend heard of one case where a young man worked as an intern on a magazine for two years before he was finally put on the payroll. Fields where graduates are thick on the ground and jobs are scarce - the law, for example - are ripe for the spread of this kind of unpaid labour, says Andrew Stewart.

"At present, law graduates are generally paid [for internships]," he says, "but you could foresee a time when firms say, 'Well, great, there are so many of you, you can just spend a year working for us on an unpaid basis while we work out who we like.' "

But what if young people are willing to do them? Does that make it all right? No, says Stewart, because you cannot agree to illegal arrangements, if that's what these turn out to be. "And given that it's not legal to volunteer to be paid less than the minimum rate of pay for a particular job," he continues, "why should it be legal to put your hand up to work for nothing, assuming you're not volunteering in the broader sense [e.g. charity work]?"

But even if some of these arrangements turn out to be legal, there's another question. Are they just?